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SBA Loans for Doctors, Medical Offices & Private Practices

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SBA Loans for Doctors, Medical Offices & Private Practices

Updated: May 24th, 2021

SBA Loans for Doctors, Medical Offices & Private Practices

It takes money to make money, but capital isn’t something most new doctors and medical offices have in abundance—not yet, anyway. Instead, you have years of academic expertise and a hunger to start putting your knowledge into practice. Now, you just need cash to make it happen.

Traditionally, lenders like to see business owners with years of experience, proven revenue, low debt-to-income ratios, and collateral. Fortunately, thanks to high income and stability in the medical field, doctors, medical offices, and private practices usually have no problem qualifying for a loan.

America needs certain industries, and it definitely needs doctors. That’s why the Small Business Administration (SBA) offers SBA loans to small businesses—and these loans are some of the most affordable, valuable loans out there.

However, they’re not the best option for brand-new doctors straight out of medical school. Lenders know you’ve been through a long, arduous multistage process of schooling for the last decade, but they want to see years in business and a proven revenue model before handing out an SBA loan.

But if you’ve been in business for a bit and need an SBA loan, you’re on the top of the totem pole of potential borrowers. Lenders recognize your huge earning potential and know it’ll be easier for you to repay your debt, making you one of the least risky investments.

What are SBA loans?

The SBA doesn’t do the actual lending to small businesses—they just partner with SBA-approved banks, alternative lenders, and credit unions that offer the loans. The SBA helps mitigate risks for these lenders by guaranteeing up to 85% of a loan’s total amount.

SBA loans are well-known for having:

  • Large loan amounts: from $500 to $5.5 million
  • Low interest rates: as low as they get
  • Long repayment terms: repayment plans as long as 25 years
  • Minimal down payments: typically only need 10% to 20% down
  • Flexible spending: use your loan on various business expenses

With all those excellent attributes, it’s no wonder SBA loans are one of the hottest financing commodities for small businesses. And that causes probably the biggest downside to SBA loans—they’re notoriously competitive. Oh, and don’t forget paperwork heavy. We’re talking about the government here, so expect mountains of papers and documentation.

What types of SBA loans are available to doctors and private practices?

SBA 7(a) loans are the most popular SBA loan, and they have the most flexibility when it comes to spending. However, they’re not the only SBA loan available to your medical office or private practice. Here are a few more SBA medical business loan options:

  • SBA (7a) loan: Use an SBA 7(a) loan to finance land purchases, construction, buy a practice, refinance debt, or invest in equipment or supplies.
  • SBA microloan: SBA microloans cap at $50,000. They’re easier to qualify for and faster to get funded.
  • SBA 504 loan: You use SBA 504 loans to finance fixed assets, like buildings, renovations, and long-term machinery.
  • SBA Express loan: SBA Express loans offer a more streamlined application process, providing smaller amounts of cash at a faster pace.

How can SBAs loans for doctors be used?

Your medical office or private practice can use an SBA loan to finance various business expenses. From buying land to expanding operations to refinancing debt, there’s a lot you can do with these loans.

Building or renovating a medical practice

Just about any construction cost can be funded through an SBA 7(a) loan. If you need to purchase a building, build one from the ground up, or make renovations, this loan has you covered. Plus, an SBA medical practice loan can finance things like furniture, lighting, landscaping, and more.

Refinancing debt

You can use an SBA loan to refinance your medical practice’s current business debt—sorry, not your student loans. If you’ve collected multiple high-interest debts over the years for various business purposes, you can refinance and consolidate these payments with a more interest-friendly SBA loan.

Buying out a partner

If your partner is retiring or moving on to a new location, you can use an SBA loan to buy their share of the business. These opportunities don’t always come as expected, making an SBA loan an excellent financing option if you don’t have cash on hand.

Purchasing an existing medical practice

Instead of building a medical practice from scratch, you may decide to purchase an existing one. Or you may choose to expand your operations by buying an additional private practice. These acquisitions can be pricy—fortunately, an SBA loan can help.

Financing equipment

Medical equipment and supplies can be expensive. For example, a low-field MRI machine could cost as little as $150,000 or as much as $1.2 million—and that doesn’t include maintenance expenses or the cost of the special room. Use an SBA loan to finance all your machinery needs.

Working capital

Sometimes you’ll need additional cash to cover your day-to-day expenses. SBA loans can be used to finance working capital needs, like paying rent, making payroll, covering utilities, or marketing your business.

Alternative loan options

SBA loans are some of the best, most sought-after small businesses loan available—but they’re not right for every doctor or medical practice. If you have a different financing use case or don’t quite meet the eligibility criteria, then you’ll need to look elsewhere for financing. Fortunately, you still have quite a few great options:

  • Term loan: Term loans are the tried-and-true classic business loan—you’ll borrow a lump sum of cash that you’ll pay back (with interest) each month.
  • Business line of credit: A line of credit provides additional working capital to finance just about any business expense. Use it and repay the funds to get access to the credit again, or keep it in your back pocket for a rainy day.
  • Merchant cash advance: Trade tomorrow’s earnings for cash today. Merchant cash advances aren’t the cheapest financing, but they’re quick and easy to qualify for.
  • Invoice factoring: Liquidate your outstanding invoices into immediate cash with invoice factoring. You won’t collect the entirety of your accounts receivables, but sometimes less money today is more valuable than more cash in a month. 

SBA loans for doctors from Funding Circle

You have enough on your plate already—let us help you navigate the (unfortunately) complex and confusing world of SBA loans. We’ll partner you with a dedicated Funding Circle Loan Specialist to walk you through the entire process.

We’ll guide you through the application process, collecting the needed documents, and understanding the lender loan offer. We work with a network of SBA Lenders to offer in–house approvals and accelerated processing giving you fast answers and even faster closings—however, the process can still take some time. 

Get ahead of the game and start your application now.

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